Best way to finance your first investment property

[Account Closed]

Much of the advice I read says the best way to start investing is to live in your first home so that you can go FHA, making it a little easier to get started (lower down payment).

My situation is unique in that my boyfriend just bought a house and I am living there with him, so purchasing and living in my own investment property full-time is not an option. As far as I can tell I have just a few options:

1. Go FHA and use that home as my current address, while essentially going back and forth between the two homes (risky, but I do work form home so this is doable). If I understand correctly, this will only be an option until we are married, since as a married couple we couldn't purchase a second home FHA due to the owner occupant rule. If we were married and I wanted to purchase a home myself with an FHA loan, would that be possible? Under the FHA guidelines, could I use a different address than my spouse's?

2. Wait and save for a conventional loan, but for me saving a 20% down payment on homes in my area will take possibly several years.

3. Save and get a conventional loan and purchase a property in an area where prices are much cheaper. The problem here is I will need to use a property manager, thus reducing my monthly profit.

I'm interested in the FHA route, but it seems tricky since I'm unmarried but not planning to live separate from my boyfriend full-time. Any thoughts or tips for how to pursue an initial investment property in this scenario?

[Will Barnard]

This is a fantastic example of why BP members should be careful when taking advice from other BP members. Particularly when legal or accounting issues are involved, some members seem to spit out answers that are completely wrong and in some cases, are reiterating bad info they received from someone else who is NOT in the know.

As far as your questions, the majority consensus here at BP Nation has spoken (one of the greatest assets to any BP member for sure!), if you get an FHA loan, abide by your contractual obligations.

Now, for what to do as an investor: I disagree (respectfully) that buying your first investment via FHA is the "best way to start". In my opinion, as an investor, use your mind and skills and get creative. You have more than just one or two options. You can direct market for a great deal, contract with a motivated seller and have them carry back owner financing, you can buy subject to the existing mortgage (sub2), you can bring in a partner with money and JV, you can build private money lenders to fund your deal, and the list goes on. You can find a good flip deal and use the profits from that to fund a conventional mortgage for a buy and hold. You can buy a multifamily building with a partner which will likely have better cash flow, you can get involved in a syndication and learn, you can find a good deal, wholesale it and use profits from that for a down on another.

Get the drift? Get out of the tunnel and into the light . . . . you will see much more clearly. I'm guessing this info is worth a few hundred dollars - or at least a few hundred votes :)